Celgene today announced the acquisition of another Arctic Aurora LifeScience portfolio company Juno Therapeutics in an all cash transaction for approximately USD 9 billion.
Last year Novartis brought the first CAR-T treatment to the market in a pediatric form of leukemia, while Gilead bought Kite Pharma for USD 12 billion and soon after their lymphoma CAR-T treatment got the FDA green light for commercial use. Juno is one of the pioneering companies behind CAR-T treatment in which a cancer patient’s own immune cells are extracted and modified to recognize cancer cells before being reinserted into the patient. CAR-T treatment have shown tremendous efficacy in late stage hematological cancers like lymphoma and leukemia, far beyond what has been previously been seen with more traditional treatments.
Juno has a broad pipeline of CAR-T treatments and recently released lymphoma data suggest that Juno’s lead product candidate in competitive with both Gilead’s and Novartis’ treatments. The next potential game-changer for CAR-T lies in early projects with the aim to treat solid tumors like lung cancer and ovarian cancer. While it has been proven difficult to reach solid tumors with immune therapies in the past, CAR-T could potentially make a huge difference for a larger number of cancer patients.
From last week, when signs of a potential deal emerged, the deal comes at an approximate 75% market premium with the Juno stock up around 27% today.
It was only earlier in the day that Sanofi announced that they had bought the US hemophilia specialist biotech Bioverativ for USD 11.6 billion. Bioverativ that spun out of Biogen last year, sells approximately USD 1 billion worth of blood factor replacement therapies for hemophilia patients annually while the company also has an innovative pipeline of treatment for hemophilia and other blood disorders that includes state of the art gene therapies. Besides the top-line addition to Sanofi, the acquisition also a new therapeutic focus for the Paris-based big pharma as well as a specialized sales force in the US.
In addition, Celgene acquired the smaller biotech firm Impact Biomedicines, with a lead product in rare hematological disorders, earlier in January in a deal worth USD 1.1 billion upfront and an additional USD 1.4 billion depending on regulatory and commercial milestones. Novartis today closed their USD 4 billion acquisition of the French imaging and cancer treatment specialists Advanced Accelerator Applications, a couple of week ago Novo Nordisk announced a public bid for the Belgian biotech Ablynx, and on January 5 Japanese large cap Takeda Pharmaceutical Company announced their intention of buying another Belgian biotech TiGenix in an offer that value the company at around USD 500 million.
In short, 2018 has seen tremendous M&A activity already in the year’s first month. In Arctic Aurora LifeScience we believe that the Juno deal, together with the other transactions should provide further conviction about the emergence of an active M&A trade this year. So far, we have seen premiums at least as high as they have been in past cycles. Acquisitions so far have been focused on late stage or commercial products, and most likely this is where continued activity will be concentrated. But many of the largest, most cash-rich companies in the industry have not even begun to participate in M&A, and when they do, prices and deal volumes may step up significantly.
Arctic Aurora LifeScience is an equity fund investing in global biotechnology and pharmaceutical companies. The fund is run by former portfolio manager in the Swedish AP3 Fonder, Ulrica Bjerke, as well as Dr. Torbjørn Bjerke, both with 20 years of experience from the market. Arctic Aurora LifeScience was launched in May 2016 with both hedged and un-hedged share classes.
Past performance in Arctic Aurora LifeScience is no guarantee for future returns. Future returns depend on the market, fund manager skill, fund risk level, costs, among others. Performance in the fund may at times be negative and may for this fund vary considerably within periods.